Following the bankruptcy of the Penn-Central Railroad, the largest business failure in American history, Congress created the Consolidated Rail Corp., otherwise known as Conrail. The legislation became effective on April 1, 1976. From the ruins of six bankrupt railroads, it put together a 17,000-mile system that served seventeen states and two Canadian provinces. It became the second-largest freight line in the country. By the end of that year, the new company had spent a billion dollars repairing about 12,000 freight cars and 500 locomotives and rehabilitating worn out and dangerous tracks. Nine years later, there were only 14,000 miles of track in fifteen states, assets worth $6 billion, and a payroll of 39,000 employees.
For several years after 1976 Conrail operated at a loss it was estimated that the railroad was costing taxpayers $ 1.8 million a day in subsidies. This was a staggering cost, but the railroad is vital to the nation's economy. Then, in 1981, the railroad made a profit that grew in the subsequent years. Nevertheless, the government was eager to dispose of the railroad to private interests, so on March 25, 1987, Conrail sold 58,750,0 shares of stock to the public, netting the government $1.88 billion. Conrail, now a privately owned, not government owned rail system, is essentially the same railroad that the trustees of the old Penn- Central Railroad tried to create before it went bankrupt.
While it is true that the early trolleys made it possible for city dwellers to move out to less congested areas, later the railroads greatly extended the distance people could conveniently travel to their homes from metropolitan centers. Today most large cities offer good commuting rail service, usually operated by metropolitan or regional authorities. In some cases the railroads contract to run the trains, in others the authority may lease or even purchase the tracks and stations and is responsible for train operation. Because these services are so essential year-round, they offer secure jobs usually with good incomes.
THE MAJOR RAIL LINES
Although the future seemed clouded for Amtrak and Conrail, many of the larger stockholder-owned railroads were prospering in varying degrees. With past and contemplated mergers of large lines, the prospect of fewer but more efficient railroads was encouraging to many shippers, which are the lifeblood of railroads now that passenger service is operated mostly by Amtrak.
In 1980 Staggers Rail Act reduced much of the former government red tape and interference with railroad operation, making trains much more competitive with trucks and water carriers. It allowed railroads to sign long-term contracts in return for guaranteed volume, which meant lower rates for the shippers and steady business for the carriers. Rail-roads could at last change their rates when necessary to meet the competition without waiting months or years for government approval. This change enabled them to attract business from the highways for the first time.
One area where this was especially beneficial was in the so-called piggyback business. This term refers to the movement of truck trailers and containers on rail flatcars. Instead of waiting for Interstate Commerce Commission permission to increase or lower rates for this kind of business, Conrail and the other roads can now match truck rates and initiate their own price changes daily, if necessary.
By the start of the 1980s it appeared that the railroads' share of total freight ton miles was growing, and with it was growing the companies' operating incomes. Increasing shipments of coal from mines in both the West and the East helped business. As some of the western carriers negotiated the purchase of oil- and coal-producing properties, economists forecast an even more profitable future for railroads.
One of the smaller but more interesting railroads worth noting is the Alaska Railroad, which is owned by the State of Alaska.
The Alaska Railroad
If you land at Seward, which is on Resurrection Bay, and plan to travel up to Fairbanks, undoubtedly you will want to go by rail. At the station your train, made up of four modem coaches pulled by a diesel, is waiting for you. At the conductor's signal the train starts off smoothly, proceeding inland to stop at Portage, then winds around Cook Inlet, and halts briefly at Anchorage to take on more passengers. From here the engine with its cars starts its long climb, passing eleven stations and crossing over the shoulder of Mount McKinley. Then it descends to the flats, where the track leads into Fairbanks. It is a 470-mile, 12-hour winding trip through wilderness, and if you look at a map of Alaska you will note that the Alaska Railroad serves only a very small part of the state. Nevertheless, the railroad's statistics are impressive:
Within the past few years, some 60,000 passengers rode annually between Anchorage and Fairbanks and 100,000 on the twelve-mile branch line between Portage and Whittier. Trains disappear into a tunnel on this line when they pass beneath the Portage glacier. The railroad provides the only direct transportation between these two cities.
On January 2, 1985, the federal government sold the road to the state of Alaska for $22.3 million, together with 38,000 acres of land; buildings worth $13 million; 1,870 cars (mostly freight) and 57 locomotives. Thus Alaska became the first state to own a railroad, which it hoped to extend to lands north of Anchorage over "some rough country" to increase its revenues.
Recognizing the need for safe and reliable tourist and regular passenger service to remote areas, especially during the cold and stormy winter months, the Federal Railroad Administration granted the Alaskan Railroad a $10 million grant in 1996 to upgrade the tracks. A recent innovation was the summertime auto/passenger shuttle from Portage to Whittier port, an unusual service similar to Amtrak's profitable Lorton, Virginia, to Sanford, Florida, successful year-round auto train.
During a recent year the railroad employed about 525 permanent employees and over 100 temporary workers for expanded maintenance of way programs during the few mild summer months. Of these, some forty were young Alaskan high school students acting as on-board tour guides and providing hospitality to passengers.